- Gold futures retreat as the week's trading begins, as the precious metal's price is affected by the rising US dollar and rising Treasury yields.
- Financial markets reacted to Federal Reserve Chairman Jerome Powell's interview on "60 Minutes," reaffirming the position that the US central bank will not cut interest rates in March.
- Moreover, this dashed investors' hopes for an early turnaround. Technically, the gold price XAU/USD fell to the support level of $2015 per ounce before recovering to around $2027 per ounce at the time of writing the analysis.
In general, the price of gold has decreased by 1.4% since the beginning of the year 2024 until now, but it has increased by 9% during the past 12 months. In the same performance, silver prices, the sister commodity to gold, continued to price below $23 per ounce. Overall, the price of the white metal has already fallen by approximately 7% year to date.
According to trading, the metal market is responding to the rise in the price of the US dollar and the US bond market, which in turn responded to Powell’s statements in the interview. The Federal Reserve Chairman admitted that the central bank would take its time before taking the first step to lower US interest rates. “We have a strong economy,” he said. Growth is proceeding at a strong pace. The labor market is strong, unemployment rate is 3.7%. Inflation is falling. He added, “With an economy this strong, we feel that we can handle the question of when to start lowering interest rates carefully.”
He added, “as you know, we want to see more evidence that US inflation is moving sustainably towards 2%. We have some confidence in that. Our confidence is rising, and we just want a little more confidence before we take that very important step of starting to cut interest rates.”
This led to a widespread sell-off in US stocks and a shift to traditional safe-haven assets. Accordingly, the US Dollar Index (DXY), which is a measure of the US currency against a basket of other major currencies, advanced to 104.43, from opening at 104.01. Overall, the index has risen by 3% year to date and is enjoying the best start to a year in more than a decade.
As is known, the rise in the value of the US dollar is bad for goods priced in dollars because it makes purchasing them more expensive for foreign investors.
Another factor affecting the gold market, Treasury yields which rose across the board, with the ten-year bond yield rising 13.1 basis points to 4.162%. also, the two-year bond yield rose 10.2 basis points to 4.472%, while the 30-year bond yield rose 11.7 basis points to 4.344%. As is known, gold is usually sensitive to interest rate fluctuations because it can affect the opportunity cost of holding non-yielding bullion.
As for other metal markets, copper futures fell to $3.7745 per pound. also, Platinum futures fell to $906.80 an ounce. Moreover, Palladium futures rose to $959.50 an ounce.
Gold Price Forecast and Analysis Today:
Based on the performance on the daily chart above, new selloffs in the gold price XAU/USD have clearly shown a head and shoulders pattern, which is a signal for readiness to sell unless the gold price gets new positive momentum from increasing global geopolitical tensions, increasing central bank purchases of gold, and investor risk aversion. So far, and over that period, the resistance levels of 2055 and 2070 dollars will remain supportive of the bulls' strength and control of the direction. Therefore, we still prefer to buy gold at every downward level and the nearest most important support levels are 2013, 2000, and 1985 dollars, respectively.
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